Balwin to cut back marketing to buoy prices

SA’s largest sectional title developer Balwin properties said it is paring back marketing due to the weak economy, explaining that its campaigns in its year to end-February had driven sales, but put pressure on selling prices.

The group said it continued to see strong demand for its apartments, but was wary over SA’s weak economic prospects, and concerned about the implications of the coronavirus outbreak.

The sustained demand is reflected in a near 11% increase in the number of apartments recognised in revenue during the group’s year to end-February, it said in a trading update.

“Demand for one- and two-bedroom apartments remained strong and comprised approximately 74% of the total apartments sold,” the group said.

Balwin followed the trend of the interim results by responding to the depressed economic conditions by increasing its marketing campaigns to clients, it said.

“Whilst proving highly successful in driving sales, these campaigns have contributed to an approximate 5% reduction in the average selling price of apartments, which was absorbed by the healthy margins generated by the business,” the group said.

Balwin said it would look to limit the campaigns offered to clients in the upcoming financial year, but added that “being cognisant of the prevailing economic environment affecting customers, specific marketing campaigns will remain a key component of the business and will be employed to drive sales where necessary.”

The group expects consolidated headline earnings per share for the period to fall by 6%-11% from the prior comparative period's 95.84c.

gernetzkyk@businesslive.co.za